unit 2 micro

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Microeconomics

Supply and Demand

AP Microeconomics

Unit 2: Supply and Demand

12th

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7 Terms

1
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substitutes and complements

  • sub: one good or the other

  • complement: both goods together

2
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price elasticity of demand

% change of Qd / % change of price

3
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elastic demand

  • consumers highly responsive to price change

  • PED > 1

4
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inelastic demand

  • less responsive to price change

  • PED < 1

5
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unit elastic

  • % change in Qd = % change in price

  • PED = 1

6
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perfectly inelastic

  • consumers buy same amount with price change

  • PED = 0

7
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total revenue test

  • change in total revenue after price change

  • elastic: price up TR down; price down TR up

  • inelastic: price down TR down, price up TR up

  • only work for demand